This business segment includes Tinder — a dating app that asks
users to swipe right to find a math — match.com, OKCupid, as well
as non-dating brands like The Princeton Review.

Analysts at Bank of America Merrill Lynch valued Tinder at $1.35
billion following the IPO announcement in June. But
using the average of peer subscription services,
BAML says a bullish scenario could result in Tinder
revenue of $250 million and a $3 billion valuation.

The BAML analysts said they estimated a value of
$27 per user for the app's 50 million users — thus leading to a
valuation of $1.35 billion. However, they added that this
estimate is below the $33 per user Facebook paid for Instagram,
and the $42 per user they paid for WhatsApp. And it's on this
basis that Tinder could have a more lofty valuation.

Due to legal restrictions associated with the impending IPO,
executives were only able to give a very limited outlook for The
Match Group. But the little information they did release
showed great news for Tinder.

In a note to clients on Wednesday, analysts at Oppenheimer
estimated that Tinder’s US paid user base grew 80% from Q1, while
it’s international paid users grew 70%. Oppenheimer, and analysts
at other banks, all seemed to agree that Tinder now has
about 500,000 paid subscribers. On this
basis Oppenheimer valued Tinder at $1.31 billion.

Tinder/Facebook

"Monetization continues to perform at or above our expectations
on key metrics like renewal, conversion and re-subscription
rates, and we’ve seen no discernible negative correlation between
monetization and growth," Match
Group CEO Greg Blatt said in prepared remarks.

"We’ve also been focusing on the core user experience, and those
efforts are starting to payoff, as we’ve seen our app store
rating climb to an industry leading 4.5 stars, and a number of
our user experience metrics are showing improvement."

The company also reported that Tinder was a "major contributor"
of paid user growth this quarter after launching its paid
version, Tinder Plus, earlier this year. As of October 2014, IAC
said that Tinder had more than 50 million active monthly users
who were collectively swiping over 1 billion times a day.

Tinder said it will work to further monetize the
app in the coming months, and Wall Street will be looking very
closely at how this pans out as the IPO approaches.